MACROECONOMICS FOR TODAY
10th Edition
ISBN: 9781337613057
Author: Tucker
Publisher: CENGAGE L
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Question
Chapter 17, Problem 8SQ
To determine
Impact of expansionary monetary and fiscal policies according to natural rate hypothesis.
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Check out a sample textbook solutionStudents have asked these similar questions
The Phillips curve is
A.
a positive relationship between price stability and constant, small-increment changes in the fiscal policy on the part of the Fed.
B.
a positive relationship in the long run between the rate of inflation and the rate of unemployment.
C.
a negative relationship between the inflation rate and the unemployment rate, at least in the short run.
D.
a positive relationship between the unemployment rate and the real Gross Domestic Product (GDP) level.
If policy makers think the natural rate of unemployment is lower than it really is, then their policies designed to move the economy to the estimated natural rate, if continued over the long run, will:
a. shift the long-run aggregate supply curve to the right.
b. cause continuing inflation.
c. shift the supply curve of labor to the right.
d. lead to a lower price level.
e. keep the economy below its potential GDP level.
What is the effect of an increase in aggregate demand on the short-run Phillips curve?
When aggregate demand increases, _______.
A.
the short-run Phillips curve shifts upward
B.
the short-run Phillips curve shifts downward
C.
a movement occurs upward along the short-run Phillips curve
D.
a movement occurs downward along the short-run Phillips curve
Chapter 17 Solutions
MACROECONOMICS FOR TODAY
Ch. 17.3 - Prob. 1YTECh. 17.6 - Prob. 1YTECh. 17 - Prob. 1SQPCh. 17 - Prob. 2SQPCh. 17 - Prob. 3SQPCh. 17 - Prob. 4SQPCh. 17 - Prob. 5SQPCh. 17 - Prob. 6SQPCh. 17 - Prob. 7SQPCh. 17 - Prob. 8SQP
Ch. 17 - Prob. 9SQPCh. 17 - Prob. 1SQCh. 17 - Prob. 2SQCh. 17 - Prob. 3SQCh. 17 - Prob. 4SQCh. 17 - Prob. 5SQCh. 17 - Prob. 6SQCh. 17 - Prob. 7SQCh. 17 - Prob. 8SQCh. 17 - Prob. 9SQCh. 17 - Prob. 10SQCh. 17 - Prob. 11SQCh. 17 - Prob. 12SQCh. 17 - Prob. 13SQCh. 17 - Prob. 14SQCh. 17 - Prob. 15SQCh. 17 - Prob. 16SQCh. 17 - Prob. 17SQCh. 17 - Prob. 18SQCh. 17 - Prob. 19SQCh. 17 - Prob. 20SQ
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- What relationship does the short-run Phillips curve show? The short-run Phillips curve shows a _______ relationship between the unemployment rate and the _______. A. positive; interest rate B. negative; interest rate C. negative; inflation rate D. positive; inflation rate Thanksarrow_forwardThe natural rate hypothesis asserts that **** A. price changes occur at a natural rate, near a 6 percent average inflation rate. B. changes in the natural unemployment rate are only temporary. C. when prices change the inflation rate changes temporarily and then returns to its natural rate. D. changes in the unemployment rate are natural and long-lasting. E. changes in the unemployment rate from changes in the inflation rate are temporary.arrow_forwardIf the actual unemployment rate falls below the natural unemployment rate, how does the actual inflation rate change? The actual inflation rate ________. A. doesn't change, but the short-run Phillips curve shifts leftward B. rises up along the short-run Phillips curve C. doesn't change, but the expected inflation rate rises D. rises and the natural unemployment rate fallsarrow_forward
- According to the modern interpretation, which of the following is true of the Phillips curve? a. It has a negative slope in the short run. b. It is vertical in the long run. c. Neither A nor B d. Both A and Barrow_forwardThe Economy in 2008In the first half of June 2008 the effects of a housing and financial crisis and an increase in world prices of oil and foodstuffs were affecting the economy. Refer to The Economy in 2008. The short-run effects of rising world commodity prices are shown by a. moving to the right along the short-run Phillips curve. b. shifting the short-run Phillips curve right. c. moving to the left along the short-run Phillips curve. d. shifting the short-run Phillips curve left.arrow_forwardThe long−run Phillips curve is a ________ curve, and moving along the long−run Phillips curve an increase in the inflation rate is associated with ________ in the natural unemployment rate. A. horizontal; no change B. downward sloping; no change C. downward sloping; a decrease D. vertical; no change E. upward sloping; an increasearrow_forward
- An increase in worker productivity brought about by the introduction of new technology into the workplace willa. shift the long-run Phillips curve to the left.b. shift the long-run Phillips curve to the right.c. decrease aggregate demand, since workers will lose their jobs.d. cause the aggregate demand curve to become horizontal. Give proper explanations for the correct onearrow_forward(a) What events of the 1970s and 1980s made economists believe that the shortrun relationship between inflation and unemployment was unstable (not fixed and permanent)? (b) Explain, using a diagram(s) and the concept of stagflation, the relationship between shifts in the SRAS curve and the position of the short-run Phillips curve.arrow_forwardIn theory, inflation not only ______ the value of consumers' money over time, but it also increases the ____ of producers over time. a.Decreases, wages b.Increases, interest rates c.Decreases, unemployment d.Increases, real GDParrow_forward
- The following graphs show the state of an economy that is currently in Tong-run equilibrium. The first graph shows the aggregate demănd (AD) and long-run aggregate supply (LRAS) curves. The second shows the long-run and short-run Phìllips curves (LRPC and SRPC). LRAS AD LRAS AD 12 15 18 OUTPUT (Trillions af dollars) LRPC SRPC LRPC SRPC 10 12 UNEMPLOYMENT RATE (Percent) Which of the following statements are true based on these graphs? Check all that apply. - The current quantity of output is greater than potential output. The natural level of output is $9 trillion. - The unemployment rate is currently 6% higher than the natural rate of unemployment. Suppose the central bank of the economy increases the money supply. Show the long-run effects of this policy on both of the graphs by shifting the appropriate curves. in the The long-run effect of the central bank's policy is inflation rate, real GDP. in the unemployment rate, and in INFLATION RATEarrow_forward32 There is a new central bank president who wants low inflation much more than the previous president did. According to the Augmented Phillips Curve Model, in this situation, which of the following would be the most help in keep unemployment from rising in the sort run? a.People know the central bank president's true desires and believe he will stay in office for a long time b.Peoples' wage wage contracts are long-lasting. c.People know the central bank president's true desires and believe that he will only be in office for a short time. d.People think that the central bank president's desires are the same as the previous president's and believe that the new president will be in office for a short time. e.People think that the central bank president's desires are the same as the previous president's and believe that the new president will be in office for aarrow_forwardWhat is the typical relationship between the behavior of inflation and unemployment? In your explanation, integrate what stagflation is.arrow_forward
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